Markets this morning are worried about how European officials plan on further funding Greece with extra money to bide them over for a few more years. The EU is completely unrealistic in thinking they can pull this off without taking any losses on their debt holdings while the IMF on the other hand understands that the only way Greece has a chance is if more debt is written off, the debt now mostly held by the EU/ECB. At around 6:30am ET, a German news story said the Germans plan on packaging the money already owed to Greece from Q2 with the Q3 and Q4 payments in one 44b disbursement. On the story, the euro bounced as did Greek stocks off their lows but even if Greece gets more money (which markets assume they will), public debt writeoffs are inevitable. German’s ZEW investor confidence in their economy over the next 6 mo’s fell to -15.7 from -11.5 in Sept and -18.2 in Aug. It’s negative for a 6th straight month and the current conditions component fell to the lowest since June ’10. Spanish bond yields continue to creep higher with the 2 yr yield at the highest in a month and the 10 yr yield is approaching 6%. UK CPI in Oct rose to 2.7% from 2.2%, a 5 month high led by higher tuition and food costs but gilt yields are little changed. In Asia, the Shanghai index closed at a 7 week low and Australia (Chinese growth proxy) business confidence went negative for the 5th month in the past 6. In the US, the NFIB small business optimism index rose .3 pts to 93.1, a 5 month high but still remains the high of the yr of 94.5 reached in April and the NFIB said “while 4 of 10 survey components rose, the index still remains in solidly pessimistic and recessionary territory.”
